Bitcoin Miner Reserves Plummet: Bearish Sentiment Looms
According to on-chain analysis, Bitcoin miners are selling more of their assets to cover their expenses, resulting in a decline in their reserves.
On March 9, CryptoQuant reported that the amount of Bitcoin held by miners decreased this year, with a more significant drop in March.
Miner reserves are currently at their lowest level since October 2021, with 1.83 million BTC remaining. This selling behavior significantly impacts the market due to the number of assets miners hold.
Although several on-chain metrics have indicated bullish signs in the market, the miner reserve metric has entered a bearish trend and reached new yearly lows.
Miners have taken advantage of the recent bullish momentum and the 45% increase in BTC prices this year to make profits and balance their expenses, which have risen due to a spike in global energy prices. However, CryptoQuant advises caution in the coming weeks, as this selling behavior may lead to a mid-term bearish sentiment in the market.
The firm’s miner position index (MPI) shows a withdrawal spike in January and early March. The MPI measures BTC outflows from miner wallets to exchanges relative to their one-year moving average. Moreover, these withdrawals coincide with price drops. Bitcoin miners are currently facing tough network conditions, as the hash rate and difficulty are close to peak levels.
This competition, combined with expensive energy bills and high semiconductor prices, puts pressure on Bitcoin miners.
In addition to selling pressure from Bitcoin miners, Silvergate’s voluntary liquidation, further Fed rate hikes, and the ongoing U.S. war on crypto all contribute to a bearish outlook for BTC and its counterparts in the short term.
As a result, Bitcoin prices have dropped to their lowest levels since mid-February, settling at around $20,200 at the time of writing.